Affle (India) Ltd (AFFLE) Q3 FY23 Earnings Concall Transcript

Affle (India) Ltd (NSE: AFFLE) Q3 FY23 Earnings Concall dated Feb. 06, 2023

Corporate Participants:

Anuj Khanna Sohum — Founder and Chief Executive Officer

Kapil Bhutani — Chief Financial and Operations Officer

Analysts:

Ashwin Mehta — Ambit Capital — Analyst

Abhishek Bhandari — Nomura — Analyst

Mayank Babla — Enam Asset Management Company — Analyst

Anika Mittal — Nvest Research — Analyst

Arya Sen — Franklin Templeton — Analyst

Dhana — ASK Investment Managers — Analyst

Hitesh Malla — Steinberg India Advisors — Analyst

Rahul Jain — Dolat Capital — Analyst

Karan Taurani — Elara Capital — Analyst

Arun Prasath — Spark Capital Advisors — Analyst

Anmol Garg — DAM Capital Advisors Limited — Analyst

Najman Isa — Sumitomo Mitsui Asset Management — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Affle (India) Limited Third Quarter and Nine Months Ended FY 2023 Earnings Conference Call hosted by Ambit Capital. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Ashwin Mehta from Ambit Capital. Thank you, and over to you, sir.

Ashwin Mehta — Ambit Capital — Analyst

Thank you, Michelle. Good morning, everyone. On behalf of Ambit Capital, we welcome you all to the Q3 and nine-month FY ’23 conference call of Affle (India) Limited. I take this opportunity to welcome the management of Affle (India) Limited represented by Mr. Anuj Khanna Sohum, who is the Managing Director and Chief Executive Officer of the Company, and Mr. Kapil Bhutani, who is the Chief Financial & Operations Officer of the Company.

Before we begin the discussion, I would like to remind you that some of the statements made in today’s conference call may be forward-looking in nature and may involve some risks and uncertainties. Kindly refer to Slide 26 of the Company’s Q3 Earnings Presentation for a detailed disclaimer.

I now hand it over to Anuj Khanna Sohum for his opening remarks. Thanks, and over to you, Anuj.

Anuj Khanna Sohum — Founder and Chief Executive Officer

Thank you. Good morning, everyone, and thank you for joining the call today. I trust all of you are keeping in good health.

Now, we achieved robust growth in nine months FY 2023 to close the period with revenue and PAT almost at par with previous full-year. While we clearly surpassed the previous full-year’s EBITDA by 4%. We reported this quarter with the highest quarterly revenue and profitability run rate. Highest CPCU revenue and user conversions. Sequentially, have been delivered revenue growth of 6.1% and a PAT growth of 17.6% quarter-on-quarter in Q3 FY 2023. We achieved revenue CAGR of 58.5% in Q3 over the last three year period, must ahead of the industry growth trends. Our CPCU business noted a strong momentum, delivering 67.8 million user conversions during the quarter at an INR51 CPCU rate. Overall, our CPCU for Q3 increased by 14% year-on-year — CPCU revenue for Q3 increased by 14% year-on-year, ahead of the total revenue growth of 10.8% year-on-year. Our CPCU business continues to be resilient and underlying the long-term sustainable business momentum.

In terms of the nine-month FY 2023, we achieved revenue growth of 40.6% year-on-year, PAT growth of 40% year-on-year. And this growth was largely well-balanced across the three quarters. Now, despite the ongoing global headwinds that have clearly impacted businesses globally, our strong entering on India and other global emerging markets has enabled us to perform well. Our growth for India and global emerging markets was approximately 23% year-on-year. I believe CPCU business model and focused execution on higher profitability and productivity underpinned our margin expansion on both quarter-on-quarter and year-on-year basis. However, macro headwinds continues to impact our business in developed markets in U.S. and in Europe. I’ve also guided in the previous calls, to mitigate this short-term impact in developed markets, we realigned our execution strategies and operating resources to focus on improving our platform level pricing and profitability, as well as maximizing our strategic partnerships. We are consistently holding our ground on quality of revenue, CPCU pricing and our market position of being the high ROI verticalized business for the advertisers.

We are focused on driving deeper consumer conversions for our customers, drawing significant moat for us — from our Affle 2.0 strategy. We believe a broad-based growth across our top industry verticals in categories E, F, G and H. This has strengthened our moat and our direct customers contribution stood at 71.8% of our revenue in nine months for FY 2023. We reiterate our strength of delivering unique consumer experiences, we have in total shared [Phonetic] three case studies in our earnings presentation over the last six quarters. These were focused on some of our key industry verticals, including e-commerce, edtech, entertainment, finance and banking, FMCG, foodtech, health-tech and so on.

Continuing on our sharing our happy customers’ success story, this time we have included three unique sales strategy focused on, the first one being, Tata Neu, the super app in India, widened greater consumer adoption for online transactions in India. And here we delivered 2.3 times quarter-on-quarter growth in conversions. The second case study is from a banking app, a Bank Jago app in Indonesia. Again, focused on growing the reach for essential financial services. Now, here the distinction — by the way, [Indecipherable] grew 2.5x quarter-on-quarter in terms of conversions. What I’m trying to emphasize in these two case studies will indicate to you is that, these are actually supported by India’s traditional large conglomerates getting into digital or traditional financial services like banking and essential services getting into greater consumer adoption on digital and therefore, there is little or no dependence for such customers on the new funding or venture capital funding or what’s happening with startups.

The third case study which we shared here is for TapNation. This is for hyper casual gaming. And this is a very fast-growing and globally resilient vertical, wider user growth across geography, including U.S. Now, for TapNation, still we delivered 1.5 million user conversions in the last quarter and got to be the number one app in the Android app store in the U.S. So I think these are very important sort of qualitative indicators of what Affle is focused on and how we are building our trajectory for greater growth and possibilities, not only in emerging markets, but also finding those emerging verticals in developed markets where we can accelerate and create a high-margin growth — sustainable growth possibilities.

We therefore remain confident of the long-term business prospects, and we continue to invest in our organic growth operations to drive sustainable growth. We are also actively evaluating inorganic opportunities with calibrated focus on higher bottom line growth for FY 2023 and beyond with greater emphasis on high-growth industry verticals. And so, our strategy, Affle is clear, it is looking at high-growth, but also sustainable bottom line expansion and that’s something that I’ve alluded to and talking about clearly, it’s not just organic moat this time, but also given these market situations, we think we can apply inorganic growth without compromising on the margin expansion, even within the first year of that possibility.

Affle continues to also be recognized as an industry thought leader. And as a testament to that, we were awarded the Momentum Leader for the demand side platform and was included in the high-performance categories in the prestigious G2 Winter Report 2023. Recently, our platforms also won seven more awards, including awards that India Digi Platform ’23, as well as award at the MOBEXX Awards 2022 organized by Adgully.

So with that, I now hand over our discussion to our CFO, Kapil Bhutani to discuss the financials. Thank you, and over to you, Kapil.

Kapil Bhutani — Chief Financial and Operations Officer

Thank you, Anuj. Wishing everyone a good day. And hope all of you are keeping safe and well.

Continuing our growth momentum, quarter three revenue stood INR376.1 crores, that is INR3,761 million, a growth of 6.1% quarter-on-quarter and 10.8% year-on-year. We had a significant revenue growth of over 10% in India and emerging markets on a sequential basis and approximately 23% growth year-on-year. Except for the developed markets, which anyways have a lower contribution for us on a consolidated basis, our business across global emerging markets remained resilient, with an overall bottom line growth momentum and margin expansion. Our nine-month revenue stood at INR10,781 million, which is INR1,078 crores, a robust 40.6% year-on-year. We recorded highest quarterly EBITDA of INR804 million, which is INR80.4 crores which was higher by 21.4% of our revenue, an increase of 11.1% quarter-on-quarter and 18.7% year-on-year.

In terms of opex, inventory and data cost was at 70-point — 60.7% of our revenue from operations in Q3, and expansion of 138 basis points sequentially, driven by our conscious effort of focusing on higher margin revenue. Our employee benefit expenses on quarter increased sequentially by around 4%, based on appraisals in few geographies and as a percentage of revenue, in-line with our previous quarters. Our normalized profit after tax for quarter three FY ’23 was INR690 million, that is INR69 crore, an increase of 17.6% quarter-on-quarter and 14.8% year-on-year. Normalized PAT for nine-month FY ’23 stood at INR1,829 million, that is INR182.9 crores, an increase of 40% year-on-year. Please refer to Slide 4 and 5 of the earnings presentation.

Our effective tax rate is slightly higher this quarter as it is inching towards long-term higher tax rates on account of lower deferred tax assets of acquired businesses. We remain focused on working capital management and our cash from operations and collections efforts have been robust. We have an extremely prudent customer profile and as such, there are no material changes in our collection risk. Affle is well-diversified with regards to markets served, tech use cases, platforms, customers, publishers and have reasonable cash in hand. We remain constant — confident of long-term business prospect to invest further in our business and stand committed to deliver long-term sustainable growth.

With this, I end the presentation and let’s please open the floor for questions.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions]

Ashwin Mehta — Ambit Capital — Analyst

So while the question queue assembles, I’ll go ahead with one question for Anuj. Anuj, international markets, especially, U.S. has been a drag for us, what are we seeing from a customer decision-making perspective? How close do you think are we to bottoming out? Then given our smaller scale and capabilities, where do you see the opportunities to outperform this market?

Anuj Khanna Sohum — Founder and Chief Executive Officer

Thanks for that question. And I think it’s very important for all our stakeholders to understand that Affle is, not only anchored deeply on India, but also as global emerging markets contributing, together with India, almost 80% of our revenues. So yes, the developed markets contribution is smaller for us, and our presence in developed markets is also relatively small, right? So those are very large addressable markets. So, even though, those markets are feeling the headwinds at the moment, we are relatively small. I mean, we have a few customers there and a few verticals and if those customers are holding back budgets or anything like that, we will see some of those headwinds impact us, which has created in the pace and we are in fact quantified it for H1 this year and clearly, we can see that we grew 3% in India and global emerging markets. So clearly, the developed markets were not doing fantastically well for this quarter.

But I think the outlook for 2023 — calendar year ’23, and financial year 2024 is exactly quite positive, in my opinion. And the reason why it is positive is because, one, I just came back from the U.S., in fact, I’m not yet over from [Indecipherable] and I have looked at what’s happening in the market and more from an internal perspective, I mean, you can say how much of this loss was — or this slowdown and headwinds will attribute to external factors, what else can we do internally, what can we calibrate, so that we can accelerate faster, more sharply ahead in some of the verticals and I found certain areas where I know these are low-hanging fruit, if we do these three, four things right in the next few months or quarters, then we’ll start seeing a more broad-based growth is widening for us because our base is very small in developed markets and the addressable market has been very large. So I think yes, external factors are there and they have impacted us, but let’s say, we are well geared up and I know it’s very clear action plan that we do over there, let’s see how it turns out, but I have a feeling that within the next couple of quarters we will turn the situation around and should be easy for us because what we mentioned, I mean, differentiated proposition, we know what we need to do, we just need to execute to the new ground realities and I think we are calibrating well towards it.

Ashwin Mehta — Ambit Capital — Analyst

Thanks, Anuj. And just one follow-up. So, we also saw the margins in the international markets go up despite revenues being flattish for us. So from an investment perspective to tap these opportunities, how are we looking at that?

Anuj Khanna Sohum — Founder and Chief Executive Officer

See, it’s counter-intuitive. And when you think that there are headwinds, a lot of times people would say, okay, to go ahead, we need to drop our pricing or margin. I know people think like that. When revenue is not coming in, one very straight reaction is that, okay, let’s do something like that. In Affle’s case, in fact, we follow the very contrarian strategy. In fact, I have been commenting on that quite deeply before as well, I said, look, we focus on profitability, we focus on margin expansion, I mean, when the headwinds already there, there is only so much that you can drive forward, then at least let’s make sure that how much ever we drive we maximize and strengthen our moat and our position, right, hold our ground.

Now, what we did in this time is that, we told our sales team and our customers that the number of conversions that we are bringing into the market are quality deep funnel consumer conversions. Now — and there are enough advertisers, okay. So there is — we were not going for volume. We were not saying that, hey, give me your volume budget or I want to get INR400 crores of revenue in this quarter, there was no emphasis on volume or revenue. It was on the quality of revenue. Pricing is held, we knew we had enough quality conversions to sell and we knew we had enough advertisers to give us a good price for the budget. We have conviction in that. We held our ground, we kept that focus and we said, look, we have one thing, this many conversions, you take it, if you cannot say the price, don’t worry, we have other advertisers, who will take it. Right? So we are able to hold our ground, so we are able to hold our pricing. So if you see the contribution of India versus international, almost 65%, 35%, right, in favor of international. The CPCU rate typically would have seen some fluctuation, but in our case, we have been able to actually improve our CPCU rate in this time. This is counter-intuitive, right?

I’m saying that most people would think that recession or these kind of headwinds would mean pricing comes down, but if you emphasize on quality and you put a scarcity premium, and say, we have enough advertisers to buy and I’m not looking for volume, right? I was not pushing for, hey, give me another few million dollars of budget, we were not scrambling like that. Given that context, we were able to hold our pricing, actually improve our pricing, that has reflected in the margins, not only in international, but also in the emerging markets internationally, as well as in India. That strategy has held us and we are able to hold our ground and not commoditize. So when the markets actually improve, I mean, we should be able to definitely defend our pricing and margins, then if we’re able to defend it in these tough times. So with that philosophy, I think it has held us in good stead.

Ashwin Mehta — Ambit Capital — Analyst

Thanks, Anuj, for your detailed answers. Well understood.

Operator

Thank you.

Ashwin Mehta — Ambit Capital — Analyst

Operator, can we take the questions in queue.

Operator

Sure, sir. [Operator Instructions] Thank you. We have the next question from the line of Abhishek Bhandari from Nomura Capital. Please go ahead.

Abhishek Bhandari — Nomura — Analyst

Thank you for the opportunity. Anuj, I just had one more question on your non-CPCU business, while it is not material, but that part of the business seems to be declining. Maybe at least for last two quarters. Historically, it has grown at a pace lower than CPCU given our focus. But if you could clarify what’s happening on that part of the business? And also, can I collaborate that the increase in margin also has to do with affording [Phonetic] contribution of non-CPCU?

Anuj Khanna Sohum — Founder and Chief Executive Officer

I think the — it’s likely qualified in your question — it’s not material. I mean, that the CPCU business is bulk of our business and it’s very natural that when times are tough and selling is hard, you will be — you sell what you can sell at the best price and margin, and go out there and make that happen. Now, the CPCU business is fairly resilient. I mean, we want to anchor ourselves as a differentiated business model, ROI-driven, verticalized for advertisers, going deeper funnel verticalized higher-value conversions and so on so forth. So I think the emphasis is clear and you work on different — when times get tough, I guess, you work on your strength rather than on your areas of, let’s say, opportunity on the price. So I think we’re maximizing on our strength.

And the non-CPCU business continues to remain a great opportunity for massive expansion going forward, whether it’s online to off-line conversions, whether it is driving newer use cases or even Platforms as a service like coming out those kind of self-serve mechanisms of licensing or enabling technologies. So there are many opportunities there for us. And those opportunities continue to remain as long-term opportunities. But I think in these situations, we had to choose and say that, look, we have this much execution bandwidth and let’s maximize on where we can extract our profitability, better pricing and so on. I think the system execution shows. I don’t think you should read into it as the opportunity in non-CPCU more shrinking. I don’t think that’s the correct way to look at it. Yeah.

Operator

Mr. Bhandari, any further questions?

Abhishek Bhandari — Nomura — Analyst

No, I’m done. Thank you.

Operator

Thank you. The next question is from the line of Mayank Babla from Enam Asset Management Company. Please go ahead.

Mayank Babla — Enam Asset Management Company — Analyst

Hi. Thank you for taking my question. My first question is regarding the growth in the quarter, specifically in Q3, so 11% y-o-y growth is much, much better than the sort of 25% annual growth that you are foreseeing in this industry, specifically in the CPCU business. So what is attributing to this lower growth? I mean, even though we have higher exposure to India and emerging markets and lower to the developed. So has there been any delayed decision-making in the clients and — or if you could give — throw some light on this?

Anuj Khanna Sohum — Founder and Chief Executive Officer

All right. So, I actually had earlier tried to answer this question already. In terms of the mix of growth, right? So when we look at Affle’s business, maybe let’s think — see the three buckets, one is India, where we grew approximately 23%. In other global emerging markets, they are combined with India, also the growth is in the similar range of 23% year-on-year. And then, developed markets, where — so 80% of our business which is India and other global emerging markets has actually shown reasonable consistency in terms of its long-term growth trends, which is what you were talking about the 25%, I think it’s within that range given a little bit of larger base in Q3 last year, because the festive season didn’t have the headwinds as strongly as the festive season this time had headwinds. So it’s not exactly comparable, but even with that, delivering 23% growth in India and other global emerging markets. So I think I would take it as a great performance and I’m very happy with our teams focused on emerging markets.

Now going to developed markets, clearly, we saw that in the developed markets, there is a contraction. And the contraction is on a small base, small base of customers there and if some of those customers who are existing customers are holding back budgets or stopping some activity for some time, then there is obviously an impact and we saw an impact in the developed markets, largely localized in a few — it was a few customer accounts in U.S. and Europe. Now, is that something to become nervous about with respect to rest of 2023 or FY ’24, the answer is, no. As I just mentioned earlier, I’ve just come back from a trip to the U.S. and I’m in touch with the ground realities. And I know that how we can do certain improvements in our execution with internal optimization, as well as — because our base is small, as we win a few more customers and broaden that base, because the addressable market is very, very large. Even if that market is having headwinds and economic…

Operator

Ladies and gentlemen, the line of Mr. Anuj Khanna Sohum has been disconnected. Kindly stay connected while we try to reconnect him. [Technical Issues]

Ladies and gentlemen, thank you for your patience. The line from Mr. Anuj Khanna Sohum has been connected. Over to you, sir.

Anuj Khanna Sohum — Founder and Chief Executive Officer

Thank you. Sorry for that interruption. So I was just saying that the developed markets, the addressable market is still live and all we will do is, have a smart execution strategies to certain emerging verticals where we believe that we’ll continue to find resilient budgets and growth and our differentiated pitch will help us to win more customers. So we have our action plans in place and I’m reasonably confident we will show meaningful results in the next couple of quarters. So, I mean, the way to look at it is that, 80% of the business is absolutely on track. Yes, in U.S. and Europe markets, there is some contraction and I think we are having action plans to neutralize that going forward.

I hope that answers your question.

Mayank Babla — Enam Asset Management Company — Analyst

Yeah, yeah, it does. And my second question is to, Kapil sir, regarding the margin. So great execution on margins. Congratulations. Just if you could — if we could attribute this to, say, good execution and the acquisitions like Jampp or this is purely out of better cost control in the erstwhile organic business? If you could explain that, please? Yeah.

Kapil Bhutani — Chief Financial and Operations Officer

See, the margins overall have been improved under the strategy to work with the clients to improve our CPCU business, which is — which has a higher margin profile, as well as we have been focusing on customers that, where Anuj has said that we have been prioritizing the conversions to customers who are paying better to us and where we can command better CPCU rate. So it has been a conscious strategy to improve our margin in this quarter.

Mayank Babla — Enam Asset Management Company — Analyst

Sure. And are you giving out still what sort of margins Jampp doing or we can take it off-line?

Kapil Bhutani — Chief Financial and Operations Officer

So generally, if you see the profile, overall, we have increased our margin by about 1.4%, that is 138 basis point, and if you see the breakup, India is under 100 basis point and rest of the world is over 100 basis point, right? So there is clear signal, which is coming in from the markets which are facing — on the margin, which are facing headwinds, and we have been trying to work on the CPCU rates to hold on to margins and improve our performance on the margins. So, the focus has been on bottom line margins in this quarter.

Mayank Babla — Enam Asset Management Company — Analyst

Sure, sure. Thank you so much and best of luck.

Operator

Thank you. The next question is from the line of Anika Mittal from Nvest Research. Please go ahead.

Anika Mittal — Nvest Research — Analyst

Hello? Am I audible?

Operator

Yes, please proceed.

Anuj Khanna Sohum — Founder and Chief Executive Officer

Yes, you are.

Anika Mittal — Nvest Research — Analyst

Okay. My first question is, can you spend some two minutes on explaining Company structure as a whole? What I am asking about is the organizational structure as a whole? Or the parent and subsidiary structure?

Anuj Khanna Sohum — Founder and Chief Executive Officer

Company structure, I hope I’m understanding your question correctly. We are a listed company in India. And we have subsidiaries around the world. We have our material subsidiaries in Singapore, which has Affle International 100% owned and all other subsidiaries are 100% owned, except I think Appnext Singapore will be the minority ownership where there is a definitive [Indecipherable] agreement to buy the rest from the promoters who joined our Company through the acquisition.

Yeah. So I think that the Company structure is — so we answered like that. Is there any specific question that you have around it, which you like us to elaborate on, otherwise it’s basically, the India company has all the global business, under which the — and it has subsidiaries internationally, which are 100% owned or to be 100% owned.

Anika Mittal — Nvest Research — Analyst

Basically I wanted to understand the relationship of parent and subsidiary, their structure? Parent structure [Speech Overlap]

Anuj Khanna Sohum — Founder and Chief Executive Officer

I couldn’t understand you. Your voice is not clear.

Anika Mittal — Nvest Research — Analyst

Your holding company [Technical Issues]. Sir, what I am asking about is the holding company — correct.

Anuj Khanna Sohum — Founder and Chief Executive Officer

You’re talking of the promoter company in Singapore?

Anika Mittal — Nvest Research — Analyst

Correct, correct.

Anuj Khanna Sohum — Founder and Chief Executive Officer

Sorry, I think the line is not clear at all, and I am not sure if you’re asking about the listed company structure or you’re talking about [Speech Overlap]

Kapil Bhutani — Chief Financial and Operations Officer

So the structure question can be taken off-line. I would request that the structure question can be taken off-line. This is focused on an earnings presentation. Can we take this off-line? Presently we can focus on this quarter’s earnings and if you have any [Technical Issues].

Operator

Ms. Mittal, may we request you to please rejoin the queue? Your voice is not clear, ma’am.

Anika Mittal — Nvest Research — Analyst

Ma’am, just one question.

Operator

Okay. Proceed. Yeah.

Anika Mittal — Nvest Research — Analyst

Our Company is not paying any dividend, while Company is growing at more than 35% in top line. So what is the Company’s rationale from not distributing the dividend?

Anuj Khanna Sohum — Founder and Chief Executive Officer

Ma’am, we are a fast-growing Company. Yeah. I’ll let you add it separate. We are a fast-growing Company and it is imperative for us to look at the capital allocation with respect to how we’re creating value for the shareholders on a long-term and we are always deliberating, we’re not close to any possibility and at the right time we will take the right decision as a Board of Directors are looking at it from how to maximize value for the shareholders if applying that capital for organic, inorganic growth is the way to create greater value for the shareholders, we would do that with prudence with careful calibration and in a very bottom line sensible way, making sure that we’re always capital-efficient. And if we have surplus capital, which is not needed to fund the organic and inorganic growth plans of the Company, we will certainly distribute dividend in that scenario. So that’s how I would like to answer it.

Kapil, if you have anything more you can please add on?

Kapil Bhutani — Chief Financial and Operations Officer

Yeah. I just wanted to make one point, we have been — we have stated this at our roadshows at the time of listing that the Company has made a policy that for the first five-year listing we will not be distributing the dividends and we will focus on growth and deploying capital for growth.

Operator

Thank you, sir. The next question is from the line of Arya Sen from Franklin Templeton. Please go ahead.

Arya Sen — Franklin Templeton — Analyst

Yes, hi. Thanks for the opportunity. I just wanted to check, last quarter you had given a guidance of 10% Y-o-Y — 10% growth on second half versus first half. Now based on these numbers, in order to achieve that, I think you will have to show Q-o-Q growth next quarter as well. So any update on that guidance? Or are you sticking to it or any clarity on that?

Anuj Khanna Sohum — Founder and Chief Executive Officer

Yeah. I think the guidance is largely held us in good stead with respect to, let’s say, India as well as other emerging markets where the growth has been significant from even — sequential basis, the trend lines have been meaningful. And even if you look at it from a CPCU business perspective, I think we have strong — quite a good resilient growth. And therefore, I think the — it was not really a guidance, guidance because we don’t really go into that specific, but I think it was more an industry outlook, which I had answered that I expect that the industry should deliver that, that kind of an outcome for an overall scenario. And in our case, more specifically, I think as I said earlier to some of the other stakeholders who were asking questions, that we were not really pushing for top line maximization. Like, let’s say, if there was a campaign coming in — an advertiser he has a campaign for $20,000 at a lower CPCU rate and in some cases, we — in some quarters we actually take up those campaigns and we say, okay, we will bring the advertiser along the way. So you can have like a few million dollars worth of campaigns, which are maybe not as high-margin or a high value in terms of pricing, but we take it and we will say, we’ll pull them up along with it.

I think in this particular quarter, our emphasis was very clear on productivity, on price, on profitability and in many of those cases, we were so stiff about it, that no I think we are not going to compromise on this. And it was completely okay to not have that kind of revenue, yeah. Also because some of the smaller, I don’t know, campaigns or customers, there could be later that quality of revenue collection kind of thing. So we just want to make sure that we are working with our larger customers, larger accounts, which will be resilient, more profitable, better pricing and better volume and that’s how we chose to execute. I hope that is consistent with what you’ve heard from us before.

Arya Sen — Franklin Templeton — Analyst

Sure. I mean, just to clarify, I mean, typically, we have seen a sequential decline in the March quarter. So most likely that is likely to remain, right, there is no reason to believe that this time would be any different.

Anuj Khanna Sohum — Founder and Chief Executive Officer

I think that is it should be more flattish than — I mean, I think the kind of decline you will see and the reason for that decline has to be not because if there is something wrong in Q4. I think it was always because Q3 was — where the advertisers that exhausted most of the budget. Now, when the festive season has headwinds in front of it, and economic recession clouds on top of it, the advertisers are also more like balancing in flattening it out, they still bend a little bit more in Q3, but typically I think in this case, we will see a more balanced Q3 to Q4 versus a usual kind of a thing because Q3 was not as exhaustive in terms of the advertisers spend. So I think Q3 to Q4 should be more flattish than otherwise. Yeah.

Arya Sen — Franklin Templeton — Analyst

Sure, sure. And the outlook for India and EMs, which are continuing to do quite well. What’s the outlook there? Are you seeing any further — I mean, any improvement there? Or is it sort of continues to be similar or can there be a risk there next year? So what’s the outlook on that part?

Anuj Khanna Sohum — Founder and Chief Executive Officer

See, I can give you one thing, from a comparative moat standpoint, Affle is in a very strong and a happy place. A lot of our competitors, big ones, small ones, first of all, they’re not calibrated on India and emerging markets. So they are in developed markets where the headwinds are stronger and the business conditions are harsher at the moment. So our competition is getting weaker.

In terms of India and emerging markets, our competitive moat is actually quite strong. And I am — I have no reason to believe that it’s what we have delivered in 2022, we should be able to at least deliver that kind of growth in hopefully a notch better as we go along and execute in 2023, I mean, in terms of calendar year. And so, I am — I mean, given the macroeconomic situation, nobody wants to hear an absolutely unqualified bullish statement, but if I have to make one, I would say, India and emerging markets, they hold us in good stead. And if we get our act together with some of the execution plans that I have put in place after my recent visit to U.S. at least, I think we should be doing — we will be surprising our stakeholders with this, again, continued growth performance going forward.

Arya Sen — Franklin Templeton — Analyst

Sure. Thanks. That’s all from my side. Thanks, guys.

Operator

Thank you. The next question is from the line of Dhana [Phonetic] from ASK Investment Managers. Please go ahead.

Dhana — ASK Investment Managers — Analyst

Yeah, hi. Am I audible?

Operator

Yes, please proceed.

Dhana — ASK Investment Managers — Analyst

Yeah. Is it possible to share the breakup of the converted users between India and outside India for this quarter and last year?

Anuj Khanna Sohum — Founder and Chief Executive Officer

I wish it was, if not at the moment because we believe it’s comparatively sensitive information to reveal our CPCU average pricing for India, as well as emerging markets. Having said that, I think qualitatively speaking, I can tell you that India is one of the most critical markets in terms of unit economics. And the fact that we are running successfully the bottom line good margins and sustainable good performance. It should give you a lot of confidence that, if Affle, with its capabilities over these years can do well in India, then it is able to do better in other emerging markets like Indonesia, Africa or other Southeast Asian emerging markets and then followed into LatAm. And I think this is a good thing because the CPCU pricing is better in other emerging markets than it is in India. And then, of course, in developed markets, it’s multiple times better. So overall, I can give you this level of detail and insight at the moment. And as and when we feel that we are comparatively safe and tough [Phonetic], we reveal more details about our pricing across markets and verticals, we will certainly keep you informed. Yeah.

Dhana — ASK Investment Managers — Analyst

Sure. Just a follow-up on that, based on your previous commentary, so pricing was the sole reason while our CPCU rates have remained flattish on a year-on-year basis, despite the skew increasing towards the Indian geography. Is pricing the sole reason for that better pricing?

Anuj Khanna Sohum — Founder and Chief Executive Officer

See, when our revenue used to be a 50-50…

Operator

Sir, sorry to interrupt, we are not able to hear you, sir. Mr. Anuj Khanna sir? Sir, we are not able to hear you. Mr. Bhutani sir?

Kapil Bhutani — Chief Financial and Operations Officer

Just check whether he is on call or not.

Operator

Sure. He is connected, sir. But we are not able to hear him. Sir, do you want to take this question?

Kapil Bhutani — Chief Financial and Operations Officer

Please dial him again.

Operator

Yes, sir, I’ll do that. Sir, in the meanwhile, do you want to take this question?

Anuj Khanna Sohum — Founder and Chief Executive Officer

Sorry, can you hear me? I’m still speaking, what happened?

Operator

Yes, sir. Sir, we were not able to hear you. Kindly continue now. We can hear you clearly now.

Anuj Khanna Sohum — Founder and Chief Executive Officer

Okay. All right. I’m not sure what the reason was. So basically what I was saying is that, even in these times we are able to make sure that we can keep our pricing intact and still deliver meaningful growth across India and emerging markets. So yes, we’d be — it was linked to pricing and even in the past I think India versus international, I think we have shown how the CPCU has progressed with the mix of business.

Dhana — ASK Investment Managers — Analyst

Sure. Thank you.

Operator

Thank you. The next question is from the line of Hitesh Malla from Steinberg India Advisors. Please go ahead.

Hitesh Malla — Steinberg India Advisors — Analyst

Yeah, hi. Am I audible al right?

Operator

Yes.

Hitesh Malla — Steinberg India Advisors — Analyst

Yeah, hi. Anuj, I just had one question for you, wanted to get your view on the recent updates to the Google Play policy for India. How do you think it will impact the industry as a whole? And how should we quantify the potential benefit to Affle given your strong OEM relationships?

Anuj Khanna Sohum — Founder and Chief Executive Officer

Yeah. Thanks for that question. I think this is super important for the ecosystem in all emerging markets around the world. Can you all still hear me well? I’m just getting a very low network for some reason. Hello?

Kapil Bhutani — Chief Financial and Operations Officer

Yeah, Anuj, we can hear you.

Anuj Khanna Sohum — Founder and Chief Executive Officer

Okay, great. So, yeah, I think it’s very important for the industry to have a fair playing field for — especially when we have ecosystem players that can have disproportionate control and they are the Empires of the match [Phonetic] and they’re also playing the match, right? And I think in those kind of situations, in any industry, it is important to have some balancing factors coming in. And so, we’re quite happy to see that the Indian ecosystem is standing out to work that. Having said that, I think Google has a fair book. I mean, they have seen this across many geographies and it will be an ongoing process. It’s not going to be as simple as that, there is a certain order that has come.

I think it’s too early to take sides or to start celebrating one way or the other. I think it’s going to be a long drawn process, but the end goal of only efficient marketplace or a business dynamic or a healthy business to happen is to have a fair balance in the playing field. And I think that’s a good thing for the industry. And for us, as Affle, I think, we were able to negotiate our growth quite well when Google was dominating unchecked [Phonetic]. And now they are being checked, I think it should still be a meaningful play for us. So I’m not calibrating my business plans around what happens to Google. I’m independent of whether they are kept in check or they are not, I think Affle has a resilient growth plan, but other than that, for an overall ecosystem level, I’m actually quite happy to see what’s happening in one step at a time with a long, long way to go.

Hitesh Malla — Steinberg India Advisors — Analyst

Understood. And just a quick follow-up on that. Is it possible to give us some rough idea of the scale of the OEM business? How big it can be with respect to the overall Company?

Anuj Khanna Sohum — Founder and Chief Executive Officer

I am not at liberty to give that breakup at the moment, but I can tell you that one of the clear areas of emphasis is, how do we maximize ecosystem level strategic partnerships, right? So we talk about our strategies and typically we talk a lot more about the 2Vs, and the Affle 2.0 strategy. So the 2Vs is, verticalization, as well as both for advertisers and the industry sort of level and vernacular, but then we also talk about the 2Os, which is operators and OEM partnerships and so on. We think that the operators and OEMs are very important case in the ecosystem and that we can absolutely partner with them and aid them to navigate through this journey and we would treat them more like a publisher, partner where Google can gain a symbiotic relationship in the ecosystem. So we see a lot of value in that collaboration across emerging markets especially and also actually in developed markets progressively. But can I quantify that and give that to you right away, no. But it’s an area of consistent growth and value-add for us.

Hitesh Malla — Steinberg India Advisors — Analyst

Okay. Thank you.

Operator

Thank you. The next question is from the line of Arun Prasath from Avendus Spark. Please go ahead. The current participant has left the queue.

We move on to the next question, which is from the line of Rahul Jain from Dolat Capital. Please go ahead.

Rahul Jain — Dolat Capital — Analyst

Yeah, hi. Thanks for the opportunity. Just to have some sense in terms of your comment regarding this India and emerging growing at 23%. If I do my basic math, it implies that there is a 20% kind of a decline in the international developing markets. So, first a clarification on that aspect.

Second, [Technical Issues] conversation is suggesting you [Technical Issues]

Anuj Khanna Sohum — Founder and Chief Executive Officer

So just one thing there. I think the terminology that you use might confuse some of the people. The growth that we’re seeing for our business in India is also consistent with the growth that we’re seeing to almost 1%, it’s almost uncanny how similarly, India and the global emerging markets is behaving for us, right, where we are seeing almost 23% year-on-year growth. And then the terminology used this, that other developed markets, okay, the international developed markets, primarily countries like U.S. and Europe in that, where we have a smaller base of customers and it’s a very large addressable market. Now, when you have, let’s say, I don’t know, 20 customers or 30 customers in the U.S. market specifically and if some of them look to be margin pressure and so on, hold back certain budgets, you will see a certain contraction. And that’s what we have seen and we have actually quantified that for H1 in our previous earnings call, that if not for that we would have delivered even more fantastic outcomes. So I think that’s how we are looking at [Technical Issues] I’m extremely [Speech Overlap] and I think the — you’re… Yeah.

Operator

Sir, sorry to interrupt. Sir, we couldn’t hear your last line, your voice is fluctuating and it wasn’t clear. Can you repeat your last, sir?

Rahul Jain — Dolat Capital — Analyst

No, I was able to get, so that’s fine.

Anuj Khanna Sohum — Founder and Chief Executive Officer

I’m not sure which line.

Rahul Jain — Dolat Capital — Analyst

Anuj [Speech Overlap] are you going to make it out?

Anuj Khanna Sohum — Founder and Chief Executive Officer

[Speech Overlap] telecom system, I’m seeing a full network here. I’m not sure when you are able to hear and when you are not.

Operator

Sure, sir. I’ll let you know, sir. Sir, please continue.

Rahul Jain — Dolat Capital — Analyst

Yeah. Anuj, secondly…

Anuj Khanna Sohum — Founder and Chief Executive Officer

[Speech Overlap]. Yeah, yeah. Go ahead, please.

Rahul Jain — Dolat Capital — Analyst

Yeah. So, secondly, [Technical Issues] part of my question. With the kind of growth that you’re seeing in different market and the kind of mix you may have. Is there a new aspirational margin that we should keep in our mind now? Or is there a number that we should change specific?

Anuj Khanna Sohum — Founder and Chief Executive Officer

Look I think we should definitely look at Affle as a company that is not only looking for certain healthy level of growth, right? But for us growth comes almost in the same breath with margin expansion with sensible bottom line execution. We don’t limit ourselves with EBITDA and PAT. I think we are very granularly focused on cash flows and we have shown that consistently as a Company. So — and this is quite — and this is not something that has become new to us, because we have gone public, and because of the market dynamics. For the last 10 years this is the DNA of our Company. We have always grown like that. We have been capital-efficient. We have been cash flow efficient, we have been bottom line-centric and so on and so forth.

Now, one of the things that we have always done in the — at least in the last three years is that, we have done inorganic growth and we have gone and bought those companies which were breaking even and they average us down in terms of our margins, right? And now we have reached a level where we are at 20%-plus in terms of EBITDA, 17%-odd in PAT and I think that’s very healthy place to be in. Now, of course, as we continue to scale up, we are a asset-light business model, revenues would hopefully grow and continue to grow, cost will also grow, but not grow as much and therefore, there should be margin expansion on consistent basis. And also to give you a better sense of it is that, we are saying if we do any M&A now and we are in discussions with, I’ve already — there is no secret anymore, but we are actively in the market, we think in 2023 we will find the right pricing to buy already meaningfully profitable companies, which we then can unlock greater growth for them and for us as a combined strategic unit and we don’t think that now onwards when we do M&A at least in 2023 that should not average us down in terms of our margins, right? So, yes it is reasonable to see us defending our margin position overtime and expanding. So if we take a two to three years view to this, I’m reasonably confident that there is enough merit in our business to defend and expand the margin a step at a time.

Can I give you a number right now, please spare me that, I’m not [Technical Issues] forward guidance and forecasting that granularity.

Rahul Jain — Dolat Capital — Analyst

No, no, this is good enough. Thank you. Thank you so much and best of luck for the results [Phonetic].

Operator

Thank you. The next question is from the line of Karan Taurani from Elara Capital. Please go ahead.

Karan Taurani — Elara Capital — Analyst

Hi. Thanks for taking my question. Two questions from my side. One is, any kind of shift within the business models or the offerings that you have. So I think the growth in the last two to three years has been driven by lot of these companies going for customer acquisition and that’s one of your larger revenue contributors, right, in terms of getting more users for that particular app.

The second one is, of course, increasing frequency for the existing users. So any kind of shift that you’ve seen, right, from just about customer addition towards increasing frequency? And what kind of an impact this has on your margins or your revenue growth?

Anuj Khanna Sohum — Founder and Chief Executive Officer

I think the — at least in emerging markets, emphasis is very clear for us, and the emphasis is on new users, new customer acquisition. And that is true, because the demand from the advertisers is always going to be to get to the next 100 million, the next 200 million that are coming in India and other global emerging markets around the world, right? So you can see in the case studies that we also shared consistently. I mean, they are looking for more user acquisition, they are looking for more mindshare and more market share and expansion and new entrants are coming in, right? A lot of traditional companies which are — so on one side, people are looking at, okay, these starters and the funding and all that kind of situation, but how many large traditional conglomerates, every other business, which is out there is going digital.

And when they go digital and if they are consumer-focused, they need that reach, right? How do we get them? Even larger established digital companies, I would say, let’s say, even Google, Facebook, Apple, or any of — Amazon, I mean, all of these companies who have tons of technology and digital capabilities and data insight, even when they come to emerging markets and they want to get to the next 200 million people, they also need to do digital advertising. So I think for us there is enough big budgets to expect from enough large enterprise customers. At the same time, we are very carefully also picking on those larger, let’s say, newer age companies that are reasonably well-funded where we know that we can continue to work with them for many years and at least get our collections eventually. So we do a really risk manage way of working on this, but user acquisition in emerging markets will continue to be a key driver and the definition of those use cases is also evolving like from mobile, mobile to off-line, where we go into driving footfall and user acquisition and transactions and so on.

Having said that, in developed markets, we also see an opportunity to help them where the users have already been onboarded for certain customers, but drive repeat conversions [Technical Issues]

Operator

Ladies and gentlemen, the connection for Mr. Anuj Khanna Sohum has been disconnected. Kindly stay connected while we try to reconnect him. [Technical Issues]

Ladies and gentlemen, thank you for your patience. The line for Mr. Anuj Khanna Sohum has been connected. Over to you, sir.

Anuj Khanna Sohum — Founder and Chief Executive Officer

My sincere apologies, everyone. I’m really not sure. My network is perfectly fine, but I keep getting dropped out.

Can I know if I answered the last question well because I kept talking and was it a fair enough answer for you?

Karan Taurani — Elara Capital — Analyst

Yeah. Am I audible? Hello?

Operator

Yes.

Anuj Khanna Sohum — Founder and Chief Executive Officer

Yes, you are.

Karan Taurani — Elara Capital — Analyst

Right. So, that is fine. So you’re getting — the point what I was trying to make is that, the dependence on user acquisition remains to be high. Now, the next question a follow-up on this was that, lot of these companies right now the commerce companies and the fintech and the gaming and the new-age companies. Lot of these companies actually spent a large chunk of their advertising money on digital. And I think even digital, they were spending more chunk of ad spend is actually coming towards the new user acquisition part, which I think is now kind of dropping and they are now trying to focus on profitability, which is why they are trying to cut ad spends on new user acquisition and they’re basically doing more ad spends on repeat user and conversion. So just connect the dots, I think, instead of bigger negative impact for a player like Affle because of these kind of reasons because I think one is, these new-age companies or Internet or commerce companies have gotten digital ad share of close to 60%, 70% and when times were good last year they were spending big amount of budgets towards there, but what is the broader impact in terms of budget cuts? I understand that 23% growth is what you expect in the emerging markets, and this factors in the negative impact. But can things go worse from this? And yeah.

Anuj Khanna Sohum — Founder and Chief Executive Officer

When people focus on profitability, as you rightly said, then if — there are two ways to gain the profit. One is that, you are getting repeat conversion from an existing user. And secondly, by getting a new conversion from a new user. Now typically out of these two choices, if I tell you, I’ll get you INR10 of sale from your existing customer, and I get your INR10 of sale from a new customer, which one would you prefer? It is easier — I’m telling you to sell that, okay, I want the revenue from the new customer because the existing one, I might anyways get this month or next month. But the new customer, I don’t want to lose it to a competition.

Now, as far as Affle business model is concerned, it is ROI-linked for the advertisers. It is a no-brainer for the advertisers who work with Affle to drive conversions. Now, Affle also delivers conversions for existing user conversions. It’s not that when I told you [Technical Issues] it’s not that Affle’s preference is that, because my product only works well, it’s not like that. My product works for all the use case scenarios, new user conversion, repeat user conversion, online to off-line conversion, connected TV conversion. We are — our technology stack is allowing us to go deep, as well as wide.

What I was telling you was that this is the advertiser sentiment. And then, you are right that the advertiser is focused on more profitability and ROI. So they are being more careful with where they are spending their digital budgets. And they want to give me ROI, otherwise, I’m not going to spend, that is helping us more and more because we are cost per converted, ROI-linked business model, whether it is a conversion from a new user first time or a repeat user online second time or whether it is online to off-line conversion from a newer or repeat, all three use cases, Affle has been supporting prior to our going public and we continue to support those. I was only telling you where the industry trend is still. And not whether Affle is more on this side and less on that side. Affle is able to address all of those use cases. If my customer wants to spend 80% budget on repeat, I can do that. If they want to spend 80% on new user acquisition, I can do that. And I was giving you my outlook that the advertisers are still spending and saying, hey, Affle, if you can get me that conversion from a new user, please get back to us. If you can’t get it from a new user, okay, fine, let’s get it from a repeat user also.

Karan Taurani — Elara Capital — Analyst

Right. And what are the kind of margins — I mean, how margins are different for both these segments for Affle as a Company?

Anuj Khanna Sohum — Founder and Chief Executive Officer

I think for us we are reasonably balanced on that. I think it’s not dramatically different in terms of margin, because to an — I mean, technically I have a chance of charging more for new user acquisition, right? But while it is a new user for the advertisers who has got the conversion for Affle platform working across thousands of advertiser apps promoted with us, chances are that user has already converted with through Affle’s platform before. So actually technically, if you think about it, everything that Affle might be doing is a repeat conversion, right, I mean from an Affle platform perspective, but for a certain advertiser, it might be a new user. Does that make any sense?

Karan Taurani — Elara Capital — Analyst

Yeah, yeah. Just one small thing on…

Operator

Mr. Taurani, I’m sorry to interrupt, sir. I would request you to rejoin the queue, sir. There are many other participants who are waiting for their turn. Thank you, sir.

The next question is from the line of Arun Prasath from Avendus Spark. Please go ahead.

Arun Prasath — Spark Capital Advisors — Analyst

Thank you for the opportunity. My line got cut off earlier. Anuj, just wanted to get a clarification. We say that we have very less base from the developed markets. We are mostly towards the emerging markets internationally also. So it’s still then linked that our international business have grown only by around 6 percentage on a Y-o-Y basis. So can you just give us outlook qualitatively on each country in which you’re operating under the international portfolio? How it is there and how they perform and what is the kind of outlook that you are expecting in calendar year ’23?

Anuj Khanna Sohum — Founder and Chief Executive Officer

Yeah. All right. Sure. I can explain it again. So if look at our business as India contributing 30% to 35% of our revenue. If you then look at other global emerging markets, let’s call them EMs, contributing another, let’s say, 45% or so of our revenue, 45%, 50% and then you can say, developed markets, DMs, contributing roughly approximately 20% of our revenue. Now, therefore, India and emerging markets is approximately 80% of our revenue, right? On that, we are delivering consistent growth. Now, India is, as you know, already 90%. What are India and other emerging markets we’re talking about, we are talking about countries like Indonesia, Vietnam. We are talking about countries like Thailand, Malaysia, Philippines, Vietnam and so on in Southeast Asia, Africa and emerging markets, as well as Latin American markets. When we look at the emerging markets on a broad basis like that [Technical Issues] that is growth is actually [Technical Issues] in tandem with how we are seeing India’s growth.

In developed markets where we have a smaller base. So when you say international, right, for international for us then becomes 65%, of which around 45% is emerging markets and 20% is developed markets. If the developed markets see a contraction and the emerging markets see a 23% growth, they are neutralizing each other, net-net we’re still growing, right? But with margin expansion, with pricing being dependent, and therefore, you are seeing a much more positive outcome for our Company in terms of how we have performed in the last year, because from a bottom line perspective, we have seen margin expansion. From a top line growth perspective, we have continued to see strong resilient growth in 80% of our business and where there is impact we have a clear action plan with a very hands on clear leadership on the ground to go and execute and solve it. So this is how we see it. And in developed markets, our base is small. The contribution of developed markets to us is small but the addressable market is very large. Even if that market is shrinking next year or next two years, it is in a very large addressable market for a small base. We need to execute into that market to find our growth and we will certainly give you updates on that in the next couple of quarters on how we’re doing there.

Arun Prasath — Spark Capital Advisors — Analyst

Just to get it clarified. You are saying that out of the — your international, that emerging markets continue to grow at 20 percentage and because the developed markets are kind of a decline. So that’s the weighted average number 6 percentage is coming. Is this what I’m hearing?

Anuj Khanna Sohum — Founder and Chief Executive Officer

That is absolutely right. And when you look at developed markets is contracting, you have to see it on a small base, few customers and some of those customers have held back their spends of their budgets, because of the economic factors that they are seeing, and therefore — I mean, it’s not something that I’m losing my sleep over. If I was I would have sensitized our investors about it.

Operator

Thank you, sir. The next question is from the line of Anmol Garg from DAM Capital. Please go ahead.

Anmol Garg — DAM Capital Advisors Limited — Analyst

Yeah, hi. Thanks for the opportunity. So I have two questions. Firstly, so our data and inventory cost as a percentage of revenue have reduced somewhat drastically in the last couple of quarters. So any particular reason for the same? And also, what can be a sustainable number that we can expect of — from our data and inventory cost? Can it remain in the 60% range or it can go downwards further? Yeah, that’s first question.

Anuj Khanna Sohum — Founder and Chief Executive Officer

Well, thanks for that question. I think the way you have to look at it is that, the ratio of data and inventory to revenue is actually anchored out of the fact that we are able to command more meaningful pricing with respect to the CPCU rate, one. And on the data and inventory cost, of course, we are not allowing that to go up. So I think the incremental benefit of the CPCU rate pricing and making sure efficiencies at the data and inventory cost has held us.

Secondly, we have focused on quality revenue which Kapil also mentioned that certain advertisers, if they are — they come in with smaller budget, smaller base, in terms of in an expansionary mindset, one would say, okay, let’s take it on, and we will slowly scale them up and improve the pricing as we go along. In the current state of mind, we didn’t want to compromise pricing. We took a very stiff call in terms of execution and therefore, we would say no to some of that. And when that happens, you would see margin expansion as well.

In terms of any guidance on that going forward, I think the — I would say that, look at from a modeling perspective, it would be somewhere within that range. I’m not suggesting that, please go and see every other quarter, we’ll have a few percentage points there. But overall, in terms of, let’s say, EBITDA or PAT, our goal would be to consistently look for overall margin expansion, because whether it is on data and inventory cost, or whether it is on opex, we expect that should not grow on a combined basis as much as we will grow our revenue. The revenue growth should be at a higher level and therefore, we will see margin expansion at the bottom line. But can I give you a specific number, state of the bat [Phonetic] on how to model it, not explicitly so, but it should be in that range, where we are looking at the data and inventory cost to be in the 60-plus, minus — more plus than minus, but in that range, yeah.

Anmol Garg — DAM Capital Advisors Limited — Analyst

Yeah. Thanks, Anuj, for this. And secondly, my question on acquisition. So we were earlier stating that we are looking for acquisition which is relatively sizable one. So can you talk a bit more on that and when can we expect it to close? Also from which geography are we expecting to close this acquisition?

Anuj Khanna Sohum — Founder and Chief Executive Officer

I think it will be — maybe taking it too far to maybe reveal our cards on it because I’m sure that those who we are talking to and negotiating with are also listening, or will tune in to listen to our earnings call, so I don’t want to give them any reason to negotiate better with us. But what I can definitely tell you is that, this is a good time for Affle to be a buyer in the market. And we will find very value-driven, appropriate transaction, which will be complementing symbiotic with us in 2026. So, without giving any reference to clear timeline, in terms of transaction size, I can tell you that these transactions would be in the range of — I mean, the kind of transactions that we’ve already done before. So when we bought Mediasmart, it was relatively smaller, but so were we. And then we bought Appnext and we had already grown in size and then we bought Jampp. I mean, as a proportion to our own size at that time when we bought these companies, I mean, we are going to look at the similar proportion and scale. So we’re not changing the playbook on size or strategic segment [Phonetic] theory.

The only place where we have clearly communicated that we have changed the playbook is that, instead of after acquiring a breaking even company and waiting for year one, two, three to turn it to a higher profitability, which we have already done in Mediasmart and Appnext, we are looking at, in 2023, there is a clear [Technical Issues].

Operator

Sir, you’re not audible. Anuj sir, you’re not audible, sir.

Kapil Bhutani — Chief Financial and Operations Officer

Hi. Yeah. Anmol, I can continue and give you the answer on that, that we have, in our earlier call also mentioned this, that we are looking at inorganics and our announcement after the Board Meeting in December was also stating that and we will update as and when the negotiations or we have closed on any deal.

Anmol Garg — DAM Capital Advisors Limited — Analyst

Sure, sure. Thanks. Thanks, Anuj and Kapil. This is really helpful.

Operator

Thank you. The next question is from the line of…

Anuj Khanna Sohum — Founder and Chief Executive Officer

All right. This is the record-breaking earnings call I have been kicking out of the call for the first time, I think. Anyway. Sorry about that everyone.

Operator

The next question is from the line of Najman Isa from Sumitomo Mitsui DS. I would request Mr. Isa to restrict his question to one, please. Kindly proceed, sir.

Najman Isa — Sumitomo Mitsui Asset Management — Analyst

Thanks. Maybe I had three questions. Just one question. If you could share a bit more color in terms of the — because of change of mix towards slightly less India versus India what [Phonetic] 50% two years ago compared to today. Can you share a bit of trend in terms of the acquisition cost side, percentage-wise versus the conversion, how much has it come up or has it reduced?

Anuj Khanna Sohum — Founder and Chief Executive Officer

You mean the cost of traffic acquisition or…

Najman Isa — Sumitomo Mitsui Asset Management — Analyst

Yes. Yeah. So I think from my — the cost of traffic acquisition phase of about 60%. I just interested to see how has the trend since then? And also how much change of mix would affect these numbers, first of all?

Anuj Khanna Sohum — Founder and Chief Executive Officer

Okay. I think I expect the data and the inventory cost, which is traffic acquisition cost plus the cost of all the processing of data and the cloud computing, related to that, and so on and so forth, to be in that range. I think it will be plus or minus between 60% to 65%. When we invest more into, let’s say, going deeper into rural or trying to calibrate intel around the next sort of frontier of users and markets, we would typically, in some cases, invest more. In certain scenarios we can pull back. But I think the trends have been quite consistent overall.

What I’m also seeing now is that, for the same amount of money that we spend, we are able to listen more, let’s say, deeply or widely in terms of connecting with the inventory and the scale, because it is no longer just looking at individual-specific targeting, we’re looking at more contextual intel. And so, when you listen more widely, you build certain deeper contextual capabilities of what’s happening across the verticals, across different segments and cohorts of different categories of users. So I think our intel is much broader and wider and it is deeper, because of the verticalization strategy that we have. So we can drive more efficiencies as we go along at will. And in many cases, we are also seeing that the first party data that is coming from our partners, where we work with them as a technology partner to deliver outcomes for them is also becoming a very positive trend and that needs to more efficiencies as we go along.

Operator

Thank you, sir. As that was the last question for today, I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Anuj Khanna Sohum — Founder and Chief Executive Officer

All right. Well, thank you so much for joining the call today. And I wish all of you a very successful rest of the year 2023, and a great financial year 2024 ahead. And I assure you that Affle will continue to deliver resilient and growth-oriented and bottom line sensible performance. And I look forward to having our next conversation in a few months. Thank you.

Operator

Thank you, sir. On behalf of –. Yes, sir. Please continue.

Ashwin Mehta — Ambit Capital — Analyst

No. I was saying, thank you, everyone.

Operator

[Operator Closing Remarks]